Selling More CDS on Europe Debt Raises Risk for U.S. Banks – Businessweek


The US must be delighted that the rumbling crisis in Europe is deflecting (or merely delaying) calls for closer scrutiny of their own financial "smokescreen".

We are at the stage where I really doubt it matters which gerry-built financial structure collapses first! Conditions are such that these fragile structures will fall one after the other and those, whose personal and collective greed led them to steer a course intended to preserve accumulated power and wealth, will come to realise the futility of the exercise when they lose both…and more.

“Risk isn’t going to evaporate through these trades,” Cannon said.

“The big problem with all these gross exposures is counterparty risk. When the CDS is triggered due to default, will those counterparties be standing? If everybody is buying from each other, who’s ultimately going to pay for the losses?”

via Selling More CDS on Europe Debt Raises Risk for U.S. Banks – Businessweek.

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THE moral investment banker: A true story


I continually try to put original thought into what I produce in this blog but when I stumbled upon this lecture (Doing good by doing well: Re-defining moral capitalism) from a senior Banker I thought I must have lost my mind completely! A banker…spouting this “stuff” that I recognised and could even has written myself (or at least cobbled it together from previous blogs on the subject matter).Ken Costa

Ethics, morals and faith…what’s not to love about this guy!?

Professor Kenneth Costa is, amongst other things, the Chairman of Lazard International, the UK Investment Bank and Prof. of Commerce at Gresham College.

Another interesting article by Prof Costa appeared in Wall Street Journal, in December last year. It contains useful information for ANYONE who has any intention to assume the mantle of “leader”

For Leadership, Read Stewardship

Stewardship has three elements.

First, influence. The steward manages networks of resources and information to effect change. The steward may take the initiative, but it only works if influence is a two-way street.

Second, affluence. Good stewardship is rewarded by material affluence. With it comes moral affluence—a richness of spirit flowing from a constructive reciprocity between the present and the future, the leader and the followers, the self and the still, quiet voice of conscience.

Third, confluence. Leadership has to bring people together, not as a common-denominator consensus, but in a way that enables us to grow as people.

As usual I intended to only transcribe a portion to provide a flavour and leave you to your own devices but it flowed so well and made so much sense that I just kept going but please follow the link for the full version.

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Noam Chomsky: WikiLeaks Cables Reveal "Profound Hatred for Democracy on the Part of Our Political Leadership"


Cropped version of Noam chomsky.jpg.

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Noam Chomsky , like another of my modern day hero’s, Nassim Taleb, tells it how it is and delivers this superb quote on the current WikiLeaks revelations:

“…one of the major reasons for government secrecy is to protect the government from its own population”

The transcript of the full interview and videos can be found here

However, whilst I interpreted that the above quote specifically related to revelations about US “Diplomacy” it could be that he also intended it to refer to US Fiscal policy. Judge for yourself. Here are his words on that subject:

 

What people are thinking is extremely interesting. I mean, overwhelmingly polls reveal that people are extremely bitter, angry, hostile, opposed to everything.

The primary cause undoubtedly is the economic disaster. It’s not just the financial catastrophe, it’s an economic disaster. I mean, in the manufacturing industry, for example, unemployment levels are at the level of the Great Depression. And unlike the Great Depression, those jobs are not coming back. U.S. owners and managers have long ago made the decision that they can make more profit with complicated financial deals than by production. So finance – this goes back to the 1970s, mainly Reagan escalated it, and onward- Clinton, too. The economy has been financialized.

Financial institutions have grown…

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Why (and how) the U.S. Has Launched a New Financial World War


BEIJING - OCTOBER 29:  Chinese and American na...

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Any, reasonably well informed and right-minded person must have been wondering just what the hell has been going on with the money being pumped into the financial system and continuing to “disappear”!?

The article, from which this extract is taken can be found here. It MAY answer some pretty obvious questions…and pose plenty of new ones!

Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets.

Victory promises to go to whatever economy’s banking system can create the most credit, using an army of computer keyboards to appropriate the world’s resources. The key is to persuade foreign central banks to accept this electronic credit.

 

The Author: Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire(new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website, mh@michael-hudson.com

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“Complexity reduction” is one of 6 Key Areas for Banking Industry


Ernst & Young recently released “CFO Report: Bank Capital Management in Uncertain Times.” The report covers, as stated, capital management strategies, but it also delves into the areas of risk management getting the most attention at global banks. Since the financial crisis, banks recognize that the quantitative risk models many had relied upon are no longer adequate. The survey found that CFOs, chief risk officers and the organizations that they are a part of are coming together to focus on six key areas of risk management:

Reassessment of business strategy
Analysis and implementation of capital optimization opportunities
Monitoring and revision of capital adequacy goals
Reduction of the complexity of business operations and rationalization of legal entity structure
Improvements in reporting
Improvements in data quality and systems
  1. Reassessment of business strategy
  2. Analysis and implementation of capital optimization opportunities
  3. Monitoring and revision of capital adequacy goals
  4. Reduction of the complexity of business operations and rationalization of legal entity structure
  5. Improvements in reporting
  6. Improvements in data quality and systems